More bang for your buck - ROAS optimization now live!
ARTICLE
What is ROAS?
Optimizing towards ROAS allows you to differentiate between conversions of different value. Instead of minimizing the cost per conversion (CPA), ROAS considers the value of each conversion, determined by your tracking setup, and maximizes the conversion sales value generated by ad spend. ROAS is usually stated as the plain ratio of ad-generated sales, and ad spend, meaning that at ROAS 1x or 100%, each euro spent in advertising generates one euro in sales.
Sales value is anything you can collect from the conversion tracking point – from a shopping basket or purchase value to estimated consumer loan value or even a non-currency value such as the number of bookings or subscription timespan. In this case, ROAS is interpreted as “how many X is generated by one unit of currency spent in advertising.” Inverting the ROAS number (or dividing 1 by the ROAS value) gives the cost per conversion value.
Why should you use ROAS?
ROAS optimization offers multiple benefits over the more popular CPA optimization. Different line items in your programmatic advertising setup reach different users across audiences and publishers and expose them to different messages. All this results in inconsistent purchase behavior, which will be reflected in the sales value of the resulting conversions. Optimizing between conversions of different sales value opens up a new way to directly boost your bottom line.
ROAS optimization with Ambine is at its best when combined with an advertising setup with line items of variable purchasing behavior or between product categories in different price points. For example, if you are wondering whether it is more profitable to advertise on desktop vs. mobile, on domain X vs. domain Y, or with creative A vs. creative B, you can split your line items based on these variables and set up an Ambine optimization group with those line items and select ROAS as the optimization goal.
Setup: Things to keep in mind
Setting up ROAS optimization is easy, as long as you keep a few details in mind. The main prerequisite is that you have set up the conversion sales value in your tracking point. If you are unsure about the tracking setup, our specialists are happy to help. You can check your conversion sales data by including the metric “Sales” in your Adform reporting.
Ambine’s ROAS optimization works the best when the individual values of conversions are not too different in size, especially if the number of conversions is low. If you have conversions of value 1€ and 1000€, the algorithm has a more challenging time figuring out the true potential of your line items. If the conversion values are stable, we recommend having at least two conversion events per line item per day on average for our algorithm to work the best.
